Nedbank shares jump

Nedbank headed for the highest level in eight months on Monday after first-half profit rose.

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Johannesburg - Nedbank, the South African lender controlled by Old Mutual, headed for the highest level in eight months after first-half profit rose, beating analyst estimates that had predicted a decline.

Read also: Nedbank's profit growth slows

The shares jumped as much as 7.5 percent on Monday before paring gains, leading returns on the seven-member FTSE/JSE Africa Banks Index. First-half earnings per share excluding one-time items climbed to R11.19 from R11.01 a year earlier as bad-loan impairments improved. That compared with the R10.67 median of three analysts surveyed by Bloomberg.

“Nedbank produced a surprisingly strong set of results, with a solid set of numbers from South Africa,” said Neelash Hansjee, a banks analyst at Old Mutual’s investment-management unit. “The credit quality improved in a tough environment while revenue performance was very reasonable. Expectations were low heading into this result.”

The lender and its peers are struggling against a South African economy heading toward a recession and a potential credit-rating downgrade of the country’s debt to junk by the end of the year. While Barclays Africa last week reported a 46 percent surge in impairments in the first six months of this year, Nedbank’s bad-debt charges decreased by 4.2 percent.

Nedbank advanced 6.9 percent to R212.74 as of 11.09am in Johannesburg, the highest on a closing basis since December 1. More than 871 000 shares changed hands, 79 percent of the three-month daily average.

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